I keep thinking about money recently. For people our age/situation/income level, Ethan and I have quite a bit of money. This is probably due to two main factors:
- We both have parents who were willing and able to pay for our college education.
- We both have parents who taught us the value of saving money and living within our means.
I’ve known plenty of people who had neither of these advantages and live paycheck to paycheck (I also know a few people who DID have these advantages who live paycheck to paycheck — James comes to mind as an example). It can be very easy to make frivolous and unwise financial decisions when you have money in your hands and aren’t thinking about the future.
Currently we have most of our savings in high interest money market accounts and revolving CDs. Ethan’s parents are nice enough to have started a retirement savings for him, and although it doesn’t have much in it right now, if he never contributed another dollar to it, by the time Ethan is 60, it would have almost $80K. We plan on adding to it.
This has me thinking about starting a retirement account for myself. I’m sure that most people my age aren’t thinking about this, but I know that the earlier I start, the better, and I also know that with no income, $80K will only last about 2 to 3 years, depending on how frugally one can live. Also, it would be really nice to have my retirement savings entirely separate from other savings, so as to prevent us from dipping into retirement when we decide to buy a house. The only thing standing in my way at this point is that the IRAs I’ve been looking at all require $3000 to start. I could afford this, but I feel hesitant to pull that much out of savings to get it started. I just got my raise to my full pay at work, so now I’ll be bringing home an extra $200 per paycheck and that will certainly ease my mind about making a big chunk of money suddenly inaccessible for the next 40 years.
This Summer, Ethan will be working full time and we’ll have about double our current income for three months. Probably that will be enough financial padding to make me take the plunge and start my retirement fund. Until then, I’ll have to not retire.